One week, seven steps, and you'll hand your accountant a complete package instead of a pile. Then set it up so you never have to do the week again.
How do you guys get organized before tax season?
Ask that in any owners' Facebook group and you'll get fifty answers, most of them some version of "I don't, and I hate it." Here's a checklist that works, one step a day for a week.
It's built around what preparers actually ask for. It's not tax advice, and your CPA or enrolled agent may want things in a particular format, so ask for their organizer first and follow it where it differs.
At the end, we'll cover how to set aside money for taxes and how to make this week the last one you ever spend on it.
Each day takes one to two hours if your bookkeeping is roughly current, longer if it isn't. Put the blocks on your calendar now, early in the morning before the phone starts, and treat them like a customer appointment you can't move.
Day 1: Get every statement in one folder
Create one folder for the tax year. Download year-end statements for every business bank account, credit card, loan, line of credit and payment processor. Include merchant accounts and marketplace payouts.
Make a short list of every account and its ending balance. Your preparer will reconcile your books to these numbers, and a missing account is the most common reason for back-and-forth.
If you've ever mixed personal and business spending on one card, note which card. You'll sort those transactions on Day 3.
Name every file the same way: year, account, month or 'year-end.' It seems fussy. It's the difference between your preparer finding a statement in seconds and emailing you to ask for it again.
Day 2: Reconcile the books
Open your bookkeeping software and reconcile each account to its December statement. The software's ending balance should match the bank's.
If it doesn't, the gap is usually duplicated transactions, missing transactions from a disconnected bank feed, or transfers between accounts recorded as income or expense.
This step matters more than any other. Only half of small businesses use accounting software at all (OnPay, 2019), and books that don't tie to the bank are where cleanup fees come from.
If you can't make an account tie out after an hour, stop. Write down the difference and the month it started, and hand that note to your preparer. A precise question is cheap to answer; an unexplained mess is not.
Get the free Owner’s Blueprint
173 systems most businesses rent, what each one replaces, and what it costs a typical 10-person company every month. Tick what you pay for, circle three, and see what owning them would look like.
Download the free Blueprint →Day 3: Clear the uncategorized pile
Filter for uncategorized and 'ask my accountant' transactions. Categorize each one. Split personal spending out as owner draws or distributions, not expenses.
Then sanity-check the big categories. Is anything wildly up or down from last year? Vehicle expenses tripled? Contractor payments missing? Those are the questions your preparer will ask anyway.
Watch for the two most common miscategories: loan payments booked entirely as expense, when only the interest is, and equipment purchases booked as supplies, when they may need to be depreciated. Flag both for your preparer rather than guessing.
If it's hundreds of items, do the large ones first. A tax deduction tracker spreadsheet helps if your software doesn't have rules, but rules that auto-categorize recurring vendors save the most time over a year.
Day 4: Contractors, payroll and 1099s
List everyone you paid as a contractor, with total paid and a W-9 on file for each. Your preparer needs this to file the 1099s you owe, and missing W-9s are a classic January scramble.
Pull payroll year-end reports if you have employees: totals for wages, withholding, employer taxes and benefits. Payroll is where owners are least confident. Only 25% of owners running payroll themselves are confident they deduct and submit payroll taxes accurately, versus 50% of software users (OnPay, 2019).
Collect any 1099s you received from customers, platforms and payment processors, and check that they match what you recorded as income.
Day 5: Assets, loans, vehicles and home office
- Assets: list equipment, vehicles, computers and furniture bought or sold this year, with dates, amounts and invoices.
- Loans: year-end statements showing interest paid. Principal isn't deductible; interest generally is.
- Vehicles: your mileage log or a reconstruction from your calendar and job records. Without a log, the deduction is hard to support.
- Home office: square footage of the office and the home, plus utilities and rent or mortgage interest, if you claim one.
Attach the receipts and invoices for anything large or unusual. If an expense would surprise someone looking at your books, it needs paper behind it.
If you're missing a receipt, most vendors can resend an invoice from their portal, and card statements show date, vendor and amount. Note what each missing item was for while you still remember.
Day 6: Records to keep, and for how long
Owners often search "what records do I need to keep for 7 years." The IRS general guidance is to keep records that support a return for at least three years from filing, longer in specific cases: six years if income was substantially underreported, seven years for a claim for a bad debt or worthless securities, and at least four years for employment tax records. Records for property and assets should be kept until the period runs out for the year you dispose of them.
In practice, many owners and preparers simply keep seven years of everything. It's the easiest rule to follow.
Store them digitally, in one place, named consistently: year, account, document type. That's what turns an IRS letter into a ten-minute task.
Day 7: Send the package, and set aside for next year
Send your preparer one folder with a cover note: the account list, reconciled reports, contractor list, payroll reports, asset list and anything unusual you want them to look at.
Keep a copy of everything you sent, and a note of any questions your preparer asks. Those questions are next year's checklist additions.
Then fix next year's cash. "How much to set aside for taxes, small business" doesn't have a single answer, but a reliable method does: take last year's total federal and state tax, divide by last year's net profit, and set aside that percentage of every deposit in a separate savings account. Your preparer can refine it.
Use that account to pay quarterly estimated taxes, generally due in mid-April, mid-June, mid-September and mid-January. Ask your preparer about the safe harbor based on last year's tax, which can protect you from underpayment penalties if this year runs hot.
Where an AI system takes it over for good
You just did a year of paperwork in a week. The goal is never to do that again.
An owned tax and audit prep system runs the same checklist continuously in your own accounts: it pulls receipts from email and photos and matches them to transactions, flags uncategorized items weekly, keeps the contractor W-9 list current, logs asset purchases, tracks the tax set-aside against actual profit, and assembles the year-end package in your preparer's format.
Your accountant still prepares and signs the return. You spend ten minutes a week answering flagged questions instead of a week in March. Our Blueprint estimate for a CPA firm relationship averages about $500 a month for a typical 10-person company; the owned system makes those hours go to advice instead of cleanup.
Questions owners ask
What does my accountant need from me for small business taxes?
Usually year-end statements for every account, reconciled books, a categorized ledger, payroll reports, a contractor list with W-9s, 1099s received, asset purchases, loan interest, mileage and home office details. Your preparer's organizer is the final word.
How much should I set aside for taxes as a small business?
A dependable starting point is last year's total tax divided by last year's net profit, applied to every deposit. Ask your preparer to adjust it for this year and for quarterly estimates.
What records do I need to keep for 7 years?
The IRS generally asks for at least three years, with longer periods for specific cases, including seven years for bad debt or worthless securities claims. Many owners keep seven years of everything for simplicity.
Can I do this checklist myself without software?
Yes, but it takes far longer. Accounting software with bank feeds and categorization rules turns most of the week into an afternoon.
Get the free Owner’s Blueprint
173 systems most businesses rent, what each one replaces, and what it costs a typical 10-person company every month. Tick what you pay for, circle three, and see what owning them would look like.
Download the free Blueprint →Keep reading
- Behind on Bookkeeping? Why the Pile Grows Faster Than You Clear It
- Never Know Your Numbers Until the Accountant Calls in April?
Sources
- Small business software adoption: payroll 60%, accounting 50%, expense tracking 35%, time tracking 31% — OnPay Small Business Finance and HR Report, 2019
- Only 25% of owners doing payroll themselves are confident they deduct and submit payroll taxes accurately, versus 50% of payroll software users — OnPay Small Business Finance and HR Report, 2019
- 28% of small businesses have been audited or received an IRS notice — OnPay Small Business Finance and HR Report, 2019
- Owners' top financial admin frustrations: tax calculations (54%), accounting (51%), tracking expenses (49%), juggling multiple apps (38%) — Tide, via Startups.co.uk, 2016
- Over 80% of the paperwork burden for small businesses comes from the IRS alone — U.S. SBA Office of Advocacy, 2026
Written by Hunter J. Schneider, founder of Valuexus. Get your free 173-point AI audit.